Nokia has reported a fall in revenue but record sales of its flagship Lumia smartphone.
The Finnish firm sold 7.4 million of the devices in the second quarter of this year following the launch of a string of new models, but total mobile phone sales declined to 61 million from 84 million during the previous year.
Experts said the latest results were still positive but suggested the firm has some way to go before it can pose a threat to the two dominant tech giants.
According to its second quarter report, Nokia Group's net sales amounted to €5.7bn (£4.9bn), down 3 per cent quarter on quarter, and total mobile phone sales also decreased quarter on quarter by 4 per cent to 53.7 million units.
Shipments of Lumia phones, however, increased by 32 per cent – a rise Nokia attributed to "strong demand" for the broadened product range and welcomed by Nokia chief executive Stephen Elop.
"We're pleased to report an underlying operating profit for the fourth consecutive quarter on a group level," Elop said. "We benefited from another strong performance at Nokia Siemens Networks, which continued to deliver well against its focused strategy."
He said the company now planned to take action to "focus its product offering and improve product competitiveness".
"During the third quarter, we expect that our new Lumia products will drive a significant part of our smart devices revenue," he added.
Stuart Miles, who runs tech website Pocket Lint, said the quarterly report offered some hope for the firm at a time when "the whole industry is down". And he said the decline in Nokia's fortunes was linked to its decision to axe the Symbian operating system.
"It's positive, and shows just how badly BlackBerry are doing," he added. "They aren't out of the woods yet. The latest release, the Lumia 1020, should help and if they can get to the all-important 10 million handsets a quarter, it might give them the momentum they sorely need."
Nokia, once the world's dominant mobile phone manufacturer, has launched several new handsets this year including the Lumia 925 – pitched as its "best smartphone ever".
The device was unveiled to much fanfare in May when Jo Harlow, executive vice president of Nokia's smart devices, stressed the company's push to ''keep innovating''.
Ernest Doku, telecoms expert at comparison site uSwitch.com, said: "The fact that we're seeing reduced losses as good news for Nokia speaks volumes about the Finnish manufacturer's recent history, but the relative success of its Lumia range is proof of Nokia's enduring appeal and hardware innovation.
"However, wider numbers suggest that Nokia is not yet out of the woods. A stronger line-up in the face of heavyweights like Samsung and Apple is needed to claw its way back into a profitable position, and the heavily hyped Lumia 1020, which takes what is capable with a camera phone to a new level, could be a timely addition to the family.
"Although toppling the likes of BlackBerry may be scant relief for a manufacturer still finding it tough to crack the lucrative US and European markets, Nokia will be looking to build on these results and fight it out with the likes of HTC and Sony."